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Periodic Versus "Can-Order" Policies for Coordinated Multi-Item Inventory Systems

Author

Listed:
  • Derek R. Atkins

    (Faculty of Commerce and Business Administration, The University of British Columbia, Vancouver, British Columbia, Canada V6T 1Y8)

  • Paul O. Iyogun

    (School of Business and Economics, Wilfred Laurier University, Waterloo, Ontario, Canada N2L 3C5)

Abstract

The coordinated multi-item inventory problem refers to the problem of managing inventories where there is a joint fixed cost for replenishing plus an item-by-item fixed cost for each item included in the replenishment order. Given that the optimal solution is likely to be too complex, attention has focused on fixed heuristics, and in particular `can-order' or (s, c, S) policies. This paper makes two contributions. First, a new lower bound on the cost of the optimal policy is proposed in order that the performance of heuristics may be measured. Second, motivated by the lower bound, a simple periodic policy is proposed and shown to be an improvement over `can-order' policies for many data sets.

Suggested Citation

  • Derek R. Atkins & Paul O. Iyogun, 1988. "Periodic Versus "Can-Order" Policies for Coordinated Multi-Item Inventory Systems," Management Science, INFORMS, vol. 34(6), pages 791-796, June.
  • Handle: RePEc:inm:ormnsc:v:34:y:1988:i:6:p:791-796
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    File URL: http://dx.doi.org/10.1287/mnsc.34.6.791
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    References listed on IDEAS

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    1. Leech, Dennis, 1985. "Ownership Concentration and the Theory of the Firm : A Simple-Game-Theoretic Approach to Applied US Corporations in the 1930's," The Warwick Economics Research Paper Series (TWERPS) 262, University of Warwick, Department of Economics.
    2. Guillermo Owen, 1972. "Multilinear Extensions of Games," Management Science, INFORMS, vol. 18(5-Part-2), pages 64-79, January.
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    Citations

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    Cited by:

    1. Gürler, Ülkü & Alp, Osman & Büyükkaramikli, Nasuh Çağdaş, 2014. "Coordinated inventory replenishment and outsourced transportation operations," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 70(C), pages 400-415.
    2. Eynan, Amit & Kropp, Dean H., 2007. "Effective and simple EOQ-like solutions for stochastic demand periodic review systems," European Journal of Operational Research, Elsevier, vol. 180(3), pages 1135-1143, August.
    3. Kiesmüller, G.P., 2009. "A multi-item periodic replenishment policy with full truckloads," International Journal of Production Economics, Elsevier, vol. 118(1), pages 275-281, March.
    4. Eric Porras Musalem & Rommert Dekker, 2003. "Controlling Inventories in a Supply Chain," Tinbergen Institute Discussion Papers 03-012/4, Tinbergen Institute.
    5. Bichescu, Bogdan C. & Fry, Michael J., 2009. "A numerical analysis of supply chain performance under split decision rights," Omega, Elsevier, vol. 37(2), pages 358-379, April.
    6. Liu, Liming & Yuan, Xue-Ming, 2000. "Coordinated replenishments in inventory systems with correlated demands," European Journal of Operational Research, Elsevier, vol. 123(3), pages 490-503, June.
    7. Schultz, Helle & Johansen, Soren Glud, 1999. "Can-order policies for coordinated inventory replenishment with Erlang distributed times between ordering," European Journal of Operational Research, Elsevier, vol. 113(1), pages 30-41, February.
    8. McGee, Victor E. & Pyke, David F., 1996. "Periodic production scheduling at a fastener manufacturer," International Journal of Production Economics, Elsevier, vol. 46(1), pages 65-87, December.
    9. Qu, Wendy W. & Bookbinder, James H. & Iyogun, Paul, 1999. "An integrated inventory-transportation system with modified periodic policy for multiple products," European Journal of Operational Research, Elsevier, vol. 115(2), pages 254-269, June.
    10. Mustafa Çagri Gürbüz & Kamran Moinzadeh & Yong-Pin Zhou, 2007. "Coordinated Replenishment Strategies in Inventory/Distribution Systems," Management Science, INFORMS, pages 293-307.
    11. Ki Ling Cheung & Hau L. Lee, 2002. "The Inventory Benefit of Shipment Coordination and Stock Rebalancing in a Supply Chain," Management Science, INFORMS, pages 300-306.
    12. repec:pal:jorsoc:v:54:y:2003:i:3:d:10.1057_palgrave.jors.2601499 is not listed on IDEAS
    13. Larsen, Christian & Turkensteen, Marcel, 2014. "A vendor managed inventory model using continuous approximations for route length estimates and Markov chain modeling for cost estimates," International Journal of Production Economics, Elsevier, vol. 157(C), pages 120-132.
    14. Melchiors, Philip, 2002. "Calculating can-order policies for the joint replenishment problem by the compensation approach," European Journal of Operational Research, Elsevier, vol. 141(3), pages 587-595, September.
    15. Zhang, Ren-qian & Kaku, Ikou & Xiao, Yi-yong, 2011. "Deterministic EOQ with partial backordering and correlated demand caused by cross-selling," European Journal of Operational Research, Elsevier, vol. 210(3), pages 537-551, May.
    16. Tsai, Chieh-Yuan & Tsai, Chi-Yang & Huang, Po-Wen, 2009. "An association clustering algorithm for can-order policies in the joint replenishment problem," International Journal of Production Economics, Elsevier, vol. 117(1), pages 30-41, January.
    17. Khouja, Moutaz & Goyal, Suresh, 2008. "A review of the joint replenishment problem literature: 1989-2005," European Journal of Operational Research, Elsevier, vol. 186(1), pages 1-16, April.
    18. Larsen, Christian, 2009. "The Q(s,S) control policy for the joint replenishment problem extended to the case of correlation among item-demands," International Journal of Production Economics, Elsevier, vol. 118(1), pages 292-297, March.
    19. Musalem, Eric Porras & Dekker, Rommert, 2005. "Controlling inventories in a supply chain: A case study," International Journal of Production Economics, Elsevier, pages 179-188.
    20. Nielsen, Christina & Larsen, Christian, 2005. "An analytical study of the Q(s,S) policy applied to the joint replenishment problem," European Journal of Operational Research, Elsevier, vol. 163(3), pages 721-732, June.
    21. Kiesmüller, G.P., 2010. "Multi-item inventory control with full truckloads: A comparison of aggregate and individual order triggering," European Journal of Operational Research, Elsevier, vol. 200(1), pages 54-62, January.
    22. Kouki, Chaaben & Babai, M. Zied & Jemai, Zied & Minner, Stefan, 2016. "A coordinated multi-item inventory system for perishables with random lifetime," International Journal of Production Economics, Elsevier, vol. 181(PA), pages 226-237.
    23. Ashayeri, J. & Heuts, R.J.M. & Lansdaal, H.G.L. & Strijbosch, L.W.G., 2006. "Cyclic production-inventory planning and control in the pre-Deco industry: A case study," International Journal of Production Economics, Elsevier, vol. 103(2), pages 715-725, October.
    24. Olsen, Anne L., 2008. "Inventory replenishment with interdependent ordering costs: An evolutionary algorithm solution," International Journal of Production Economics, Elsevier, vol. 113(1), pages 359-369, May.
    25. Rosales, Claudia R. & Magazine, Michael & Rao, Uday, 2015. "The 2Bin system for controlling medical supplies at point-of-use," European Journal of Operational Research, Elsevier, vol. 243(1), pages 271-280.

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